Matt Rubel is looking to empower a business. The former CEO of Cole Haan just launched a retail-focused SPAC called Empower Ltd. (NYSE: EMPW-UN), which raised $250 million to find a target. And with more than 40 retailers having filed for bankruptcy this year, the most in the same period over the last 10 years, Mr. Rubel believes the time is right. There are opportunities among a range of retailers, especially new concepts that may not get the attention they deserve in the current climate.
Empower will be a portfolio company of private equity firm MidOcean Partners. In addition to the PE firm having skin in the game, the SPAC has full access to the MidOcean deal team, their industry insight and expertise, capital markets experience, and up to $50 million in an already committed private placement.
IPO Edge: How did you come up with the name?
The name “Empower” is an important one that comes straight from our managing philosophy, one built around collaboration rather than dictation.
Our team has deep operational, investment and financial expertise, resources that we want to leverage to help empower management teams to continue to run their companies. With our guidance and support, Empower can truly help unlock the full potential of their business.
There has been a wave of SPACs raised this year, why now and why Empower?
For Graham Clempson (my partner in Empower and Co-Founder, Vice Chairman and Executive Board member of MidOcean Partners) and I, this is more than just about raising capital; I’m an operator at heart, so for us it’s about helping companies. And we knew that if we could bring great talent onboard, we could find the solutions that would unlock value and help move companies forward. Empower’s structure is really unique: strong operational leadership that is fully ingrained in a private equity fund (MidOcean Fund V) that offers significant resources and talent that stretches across consumer sectors.
It matters who you partner with – we set out to be different from other SPACs in that we’re not just bankers, we’re thinkers. We want to help companies reach their full potential, which is why we bring operational and financial expertise to do just that versus other SPACs.
And some of what makes the timing right is in response to the pandemic. The change in market dynamics have left many companies looking for options to raise capital. A SPAC is simply a better tool to go public, and now we’re bringing operational experience with it, which makes for a powerful and compelling combination.
Even with the wave of SPACs, there are still huge opportunities out there. Almost 500 companies have raised rounds of $50 million or more since 2015, totaling approximately $119 billion in aggregate capital raised – less than 20% of these companies have leadership with substantive public company experience. We can be that bridge that helps them succeed as a public company.
With traditional retailers being disrupted like never before, record unemployment and some indicators we are already in a recession, where are you looking for opportunities?
Despite the economic uncertainty, there are huge opportunities in the consumer space, which is going through unprecedented change. It is this new consumer that we’re focused on, and we’re looking for the winners ready to take advantage of these changes. We’re seeking businesses that complement our broad experience in consumer-facing enterprises, and are at the forefront of evolving preferences, tastes, experiences and values.
Our focus is on a company with strong user economics and a forward-thinking consumer mindset. Ideally, we are looking for strong brand power, leadership credentials, a culture of innovation, digital acumen, supply chain localization and modern values that incorporate the shift towards healthy and active lifestyles.
There are sectors growing even faster than the consumer segment as a whole and we plan on focusing on opportunities within those segments, including DTC Beauty & Personal Care, Online Virtual Fitness, Digital Technology & eCommerce, High-Growth Retail, Alternative Accommodations, SmartHome Appliances & Equipment, Functional Beverages, Pet Snacks & Treats, Plant-Based Food & Beverages, Home-And-Mile Delivery, among others.
I see that Empower is a portfolio company of MidOcean and the firm committed to providing an additional $50 million. Can you talk about that structure and how that differentiates Empower?
MidOcean Partners is perhaps the best middle-market private equity firms in the market, and our focus is on leveraging their resources and experience. Our investment decisions will utilize the formula created by MidOcean’s consumer-focused investment team, with a focus on identifying sector themes, talent development, sourcing of opportunities and driving value in the business plan.
And as a portfolio investment held in MidOcean Partners V private equity fund, we’ll have access to MidOcean’s platform, network and resources.
You’ve put together an impressive advisory board. What made them want to be a part of Empower?
We have truly put together an exemplary and diverse list of business leaders and category experts, including Kandy Anand from Molson Coors, Gina Bianchini from Mighty Networks, Jeffrey Jones from Vail Resorts, Beth Kaplan from Rent the Runway and GNC, Matt Maddox from Wynn Resorts, Mindy Grossman from WW, William Cyr from Freshpet and Matthew Shay from the National Retail Federation. All of them understand the changing demands of their consumers, and since they bring deep experience from their individual sectors, they’ll offer invaluable guidance as we begin to search for opportunities. They admire our value alignment and want to work collectively to fund that next big opportunity.
How do you see consumer behaviors, tastes, preferences changing long term as a result of the pandemic?
COVID has made it impossible for companies with the wrong business model or poor connections with consumers to survive. We’ve studied the response to COVID and are focused on empowering management teams through the crisis and on to the next step of their journeys.
If anything, the pandemic has magnified and accelerated many of the changes that the consumer had already begun to experience, from communications and workplace shifts to an increasing demand for ecommerce and delivery solutions. It’s certainly fair to expect many of these changes to permanently affect the landscape.
In the end, success post-pandemic will be all about connection. Companies need to offer a differentiated proposition that creates more meaning and connectivity to the modern consumer, one that combines a passionate user base with the potential to grow their business and their brand in new channels.